INTERMODAL RAIL Intermodal rail energizes traffic By Darryl Anderson Managing Director, Wave Point Consulting

ail intermodal traffic consists The growth of international intermodal traffic in is primarily of retail goods in over- increasingly linked to North American economic and trade seas containers transported by train,R ship, and truck; and in domestic conditions. containers and 53-foot trailers moved by train and truck. Since Canadian rail- roads directly control the marketing of he said. “In fact, the Prince Rupert inter- York and inland points across Canada their intermodal services (in contrast to national intermodal model is the total and the U.S. Import traffic from the Port the where the service is reverse of the southern California mar- of Vancouver is mainly long-haul busi- wholesaled), the commercial pulse of the ket. Vancouver is somewhere between ness destined for eastern Canada and the Class 1 railways in Canada can directly Los Angeles/Long Beach and Prince U.S. Midwest and Northeast. energize port traffic. Rupert. In the Canadian port market, On Canada’s Pacific Coast, CN is the Intermodal traffic volume increased the cargo and containers need to go clear international intermodal market seven per cent for CP and 16 per cent for inland.” In turn, this creates opportun- leader. The company handles approxi- CN in the Second Quarter of 2017. With ities for export cargo to flow through mately 70 per cent of Vancouver’s con- such a torrid growth rate, port officials either the Vancouver or Prince Rupert tainer traffic and 100 per cent of Prince and shippers are asking what the outlook gateways. Rupert’s traffic. In January 2016, CN’s will be for international intermodal traf- In an interview with BC Shipping News, major container line contracts were fic. This article explores several import- CP’s Jonathan Wahba, Vice President renewed and they also picked up Yang ant topics with top Canadian National Sales and Marketing, Intermodal and Ming’s business following commence- (CN) and Canadian Pacific (CP) rep- Grain Canadian, said that “the direct ment of a new service for the container resentatives to help shippers make relationship that railways have with cus- line at Vanterm and Centerm. informed supply chain decisions. tomers has resulted in service innovation. Ruest confirmed that several develop- For example, in the U.S., railroads do ments were occurring that will benefit Outlook not offer generator sets for cool cargoes. shippers and energize future port traf- The growth of international inter- Rather, they offer a clip-on service.” fic. The most significant of these are modal traffic in Canada is increasingly The reach of CN’s international inter- the 500,000-TEU capacity expansion linked to North American economic modal service extends to import and of the DP World Fairview Terminal and trade conditions. CN’s Jean-Jacques export container traffic at the of in Prince Rupert and Vancouver’s Ruest, Executive Vice President and Vancouver, Prince Rupert, , Deltaport rail expansion. Deltaport has Chief Marketing Officer, noted that the , Halifax, New Orleans the largest on-dock intermodal railyard international intermodal model is differ- and Mobile whereas CP’s international in and is undergoing a ent in Canada and the U.S. “In Canada, intermodal business consists primarily of redesign that will increase rail capacity there is not as much transloading as Los containerized traffic moving between the to 1.9 million TEUs within its existing Angeles and Long Beach, for example,” ports of Vancouver, Montreal and New footprint, according to Louanne Wong,

The redesign of Deltaport’s on-dock intermodal railyard will allow CN to market new capacity into the Canadian and U.S. markets.

Photo: BC Shipping News 34 — BC Shipping News — September 2017 INTERMODAL RAIL

Manager of Market Initiatives at GCT Creel, President and CEO, is cham- single containers off trains for inspec- Deltaport. Thus, CN is actively looking pioning the charge to get their inter- tion by Canadian and U.S. authorities to sell this new 20 per cent incremen- national intermodal business back on as opposed to having entire intermodal tal capacity into the Canadian and U.S. track. During a recent conference call for cars set-off, eliminating the delay of non- markets. investment analysts, Creel said that “we targeted containers. On the Atlantic Coast, CN is also spent the last four years fixing the engine CP is also making the single largest working with DP World at the Port of and building the bench on the intermodal purchase of gensets in railroad his- Saint John in New Brunswick and has side. We’ve created an operating model, tory with an order for 41 new units resulted in the introduction of a new but we are leveraging the strengths of the equipped with the latest telematics and service from the Caribbean by CMA- network which are the shorter lengths of most fuel-efficient technology avail- CGM. On August 25, CMA-CGM haul on our key markets.” able in the marketplace. The equipment initiated a new weekly service between This comment was reinforced by will initially be delivered in September Eastern Canada and the Caribbean Wahba’s comment to BCSN that the through to the First Quarter of 2018. with direct service to Saint John. It con- outlook for international intermodal is Gensets are purpose-built 40-foot con- nects Canada directly with 10 ports in strong and in fact, the “rate of growth tainers that house two large generators the Caribbean and a multitude of port in Canada is outpacing what is occur- capable of powering up to 17 refriger- transshipment and inland rail possibil- ring in the U.S. by a two-to-one mar- ated ocean-going containers. With this ities. Canadian exporters and importers gin.” He further indicated that CP is investment, CP will expand its protective now have new competitive connections laying a foundation to take advantage of and perishable service and will allow CP to and from the Caribbean, Central the increase in international intermodal to launch more transcontinental genset America, the East and West Coasts of traffic that is being driven by larger ships train starts from the ports of Vancouver South America as well as , Europe under new shipping alliances. and Montreal. and Oceania. CP successfully opened a new “live” While CP has experienced a decline lift at Portal, North Dakota, in May Adjusting to the needs of new in international intermodal volume in 2017. Portal is the border crossing for shipping alliances recent years — primarily due to the loss CP’s intermodal traffic moving between Keith Reardon, Vice President of of three container-line contracts to CN Western Canada and the U.S. Midwest. Intermodal, and Dan Bresolin, Assistant (APL, MOL and OOCL) — Keith The new service allows CP to lift Vice President, International Intermodal,

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September 2017 — BC Shipping News — 35 INTERMODAL RAIL

CN introduced a significant change in the handling of Centerm and Vanterm via the CP main line on the South Shore of Burrard Inlet. import containers from the South Shore terminals at the In January 2017, CN resumed switching in early 2017. their traffic to the South Shore con- tainer terminals and rerouting via the Burrard Inlet Line and across the New CN, both commented on CN’s proactive tied to the ability to move containers Westminster Rail Bridge. Consequently, stance to prepare for larger ships and chan- inland. He attributed last year’s double- CN has grown the international inter- ges because of alliances. “Since the First digit growth in international intermodal modal business in the first six months Quarter of 2017, CN has been consulting in Halifax in part to the work that CN of the year with container traffic volume with its customers to determine which had undertaken with CMA-CGM in up 135 per cent in the Second Quarter reconfigured strings need to be serviced, previous years; revised trade lanes; and of 2017. “In part, intermodal traffic has with what volume of traffic and where the better connectivity to the Mediterranean. increased because CN has worked with cargo needs to go,” said Bresolin. CN introduced a significant change GCT at Vanterm to handle some of the Ruest noted that container traffic at in the handling of import containers container traffic that might have other- both Halifax and Montreal ports are up from the South Shore terminals at the wise been displaced by the rail expansion 10 per cent over last year’s Second Quarter Port of Vancouver in early 2017. Under a project at Deltaport,” said Ruest. 20170030-GillespieMunro-HalfPage-70yrs_update.pdf 1 2017-01-23 9:22 AM and believes that future growth potential 2004 CN/CP co-production agreement, Wahba confirmed that CP has also at these two Canadian ports is directly CP handled theirs plus CN’s traffic to made investments to improve service to the South Shore terminals including $2 million in January 2017 to improve the fluidity of container traffic on the South Shore. A RESPECTED NAME ININ INTERNINTERNATIONAL UN NOM RESPECTÉ DEPUIS 70 ANS DANS Reardon noted an additional oper- FREIGHT FORWARDING FOR OVER 70 YEARS L’EXPÉDITION INTERNINTERNATIONALE ational change in Vancouver last year to [email protected] / www.gmunro.ca create capacity. Both GCT Deltaport and CN started draying containers. “CN started trucking 6,000 to 7,000 feet of intermodal traffic per day from Deltaport to their Surrey domestic inter- modal facility to accommodate the needs 1947 of shipping lines while the Deltaport rail expansion project was underway.” 702017 Even with a weaker market share, There is NO substitute RIEN ne surpasse for experience l’expérience CP’s Creel believes his company will see intermodal growth. “We’re doing some MONTREAL TORONTO VANCOUVER things to enhance the network to make Tel (514) 871-1033 Tel (905) 362-5500 Tel (604) 637-1043 Toll Free 1-800-501-1770 Toll Free 1-800-501-1780 Toll Free 1-877-501-1790 us more attractive as we’re also dealing with our international intermodal cus- tomers as we go forward,” he has publicly stated. “We’re looking at investing in some transfer facilities, transload facili- ties we have not had in the past, specific- ally in Vancouver.” “CP opened a container transload facility at their Coquitlam yard in July 2017,” Wahba confirmed. “The import boxes that are used to support Canadian Tire’s import traffic are being reloaded to export pulp and export containers are sent by rail to Deltaport, eliminating the local drayage movement.” How shippers and freight forwarders can take advan- tage of container match-back opportunities CN’s Ruest noted that with a growing number of shipping line partners, there is a much bigger pool of international

36 — BC Shipping News — September 2017 INTERMODAL RAIL Photo: BC Shipping News Shipping BC Photo: containers and that the recently completed Fairview expansion in Prince Rupert provides more incremental capacity that will benefit shippers. He also noted that the increased rail capacity at Deltaport will result in an increase in CN’s capabilities to accommodate traffic from bigger ships, particularly if the ship is coming to Vancouver as the first port of call. On the export side, Ruest indicated that if an exporter is located where there is an intermodal terminal (i.e., Edmonton, Calgary, Prince George, Saskatoon and soon to be in Regina), empty containers are available. The Prince Rupert gateway pre- sents new export opportunities at Tidal Coast Terminals and Coast Tsimshian Enterprises Lumber Transload facilities in Prince Rupert and via CN’s Prince George facility. “For exporters, match-back opportunities will come about as the result of increased container terminal capacity,” said Ruest, “especially since we are seeking to create more balance in the West with laden inbound and export boxes.” Case in point, the new partnership between Ray-Mont Logistics, CN and the will see the development of a new grain container stuffing facility operating for the 2017/2018 grain season. The facility will handle pulses and cereals (such as len- tils, peas, beans, soybeans, flax, and wheat) as well as other specialty crops transported in hopper cars by rail from Western and Central Canada and the U.S. Midwest. The cargo will be transferred to ocean containers for export via the Fairview CP has added transload facilities at their Coquitlam yard Terminal. to facilitate increased capacity. CN is also working with a partner to open an intermodal ramp in Regina in 2018 which will be an attractive location for inland represents new short-term supply chain opportunities or specialty crop export loading. a structural change in the marketplace. Bresolin noted that the domestic repositioning of containers CN’s Ruest credits the increasing container capacity in Prince also helps exporters. CN’s repositioning program works with Rupert as a spark for improved inland container availability. beneficial cargo owners and can also provide opportunities for The expansion of Fairview Terminal and rail infrastructure seasonal shippers or when other transport options are stretched. enhancements at Deltaport will only intensify the magnitude Examples of goods repositioned include the use of refrigerated of the changes in container availability. containers, for foods, cheese, liquor, etc. CP’s Wahba agrees that a structural shift in the market has Reardon sees the situation concerning inland container avail- occurred. “The introduction of precision scheduled railroading ability improving for exporters. “Over the last seven years, steam at both Class 1 railroads has resulted in predictability, reliabil- ship companies have moved from a port-to-port model in Canada ity of service and availability of equipment in the middle of the to what we refer to as a moving inland point intermodal,” he said. continent,” he said. As a result, there are growing opportunities As a result, the long-festering issue of consistent empty container for Canadian exporters since the outlook on the availability of availability on the Canadian Prairies and B.C. is easing up. export boxes looks to remain high. CP believes they can recapture some lost international CN has captured most of the growth in Canadian inter- intermodal market share. “In the international space and our national intermodal traffic over the past few years. Since the particular network, we are going to have some benefits going international intermodal contracts that railways have with the forward that, to me, are meaningful,” Creel said when speaking container lines are multi-year agreements, the potential book of to investors. “Hapag-Lloyd has decided to bring the largest ship business that can shift between the railroads each year is some- ever to visit Canada. Hapag is our anchor customer in inter- what limited. In 2018, CP will have an opportunity to compete national intermodal, in Vancouver. Vessels which were previ- for several shipping line contracts. Success in attracting more ously 8,500 TEUs, are now 13,000 TEUs. Thus, CP expects container line traffic would be an encouragement for some of natural growth as the fall peak shipping season arrives on the Canada’s largest shippers located near CP’s inland intermodal international side.” facilities. CP is working with Hapag-Lloyd to use the 40-foot reef- Over the next two years, shippers and port officials might see ers in domestic service with the gensets to move product into the fruits of CP’s renewed interest in international intermodal. Winnipeg. In turn, this creates opportunities for the boxes to be However, CN’s track record and the desires of the container used by exporters. The start of the service is resulting initially lines for service quality and price will also help shape how port in approximately 20 to 30 containers per month of exports. traffic and trade lane growth is energized. Darryl Anderson is a strategy, trade development, logistics and Conclusion transportation consultant. His blog Shipper Matters (http://wave- While international intermodal is energizing port traffic, a pointconsulting.ca/shipping-matters) focuses exclusively on mari- major issue for exporters is whether the availability of containers time transportation and policy issues.

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